Exchange Server 2003 is one of the client-server messaging systems by Microsoft. Earlier messaging systems by Microsoft and other vendors used to be referred as shared folder messaging systems which basically meant that in order to user to send email message to other user they needed directory permissions over recipient's folders or directory in order to place the message in that folder. Microsoft mail and earlier messaging systems by Microsoft used these technologies to transfer messages from user to user. Exchange 2003 is a new type of system which is called a client-server messaging system. A client-server messaging system basically means that the load of sending the message from person to person is separated or split between the client and the server. The client plays the role of sending the mail message, the server receives that message, processes it and then sends that message to another user. In the Exchange server the process work in the sense that a client sends the message to the server, the server processes that message and then notifies the receiving clients that he has a new message in his mailbox. The receiving client then retrieves the message from the exchange server.
Exchange 2003 uses these methods of communication with its clients and therefore it is much more secure messaging system than the shared folder messaging system. It is more secured because, client only needs to talk to a specific process on the server. They don't need to have permissions on every single directory. Also this type of messaging allows many more users to be stored on the server because directory structures are not maintained and it is going to be maintained as mailbox within a single database. This allows much more scalability.